In January 2021 the government launched a consultation to assess how the new Code was working in practice. The government’s response to that consultation in November proposed changes to address three main “issues”:
- Obtaining and using Code agreements;
- Rights to upgrade and share apparatus; and
- Renewing expired Code agreements.
The majority of the proposed changes are now contained in the Product Security and Telecommunications Infrastructure Bill, which is currently making its way through Parliament.
Obtaining and Using Code Agreements
Lack of engagement
One element identified by the consultation was a perceived “lack of engagement and collaboration” between parties, which makes negotiation (and future working relationships if operators move onto a site) difficult.
The government is proposing two main changes to address this lack of co-operation between the parties – more ADR, and mandatory complaints procedures for operators.
Alternative dispute resolution (ADR) – the changes stop short of making ADR mandatory, but should bring Code applications in line with pre-action protocols for other forms of litigation. The changes will:
- create a duty under the Code for operators to consider ADR;
- require operators to mention ADR to site providers before going to court; and
- require courts to take account of unreasonable refusal to engage in ADR at the costs stage.
Complaints – Ofcom’s Code of Practice will be amended to include matters relating to operators’ handling of complaints about their conduct in Code negotiations. However, the government declined to make the Code of Practice enforceable, as requested by landowners, and it remains “best practice” only.
Operators will also be required by statute to have a sufficient internal complaints procedure for Code cases. However, this is not part of the current Bill, and will instead be passed by future secondary legislation.
In response to operators’ complaints, the Bill will introduce a new procedure for interim rights where occupiers do not respond to requests for Code rights.
Operators will be required to issue a warning notice at least 14 days after the initial request, another warning after a further 14 days, and then a final notice between 14 and 28 days after the second.
If the occupier still does not respond, the operator can apply to the court for interim Code rights for a period of up to 6 years, or until a replacement agreement is put in place.
Note that as currently drafted, a written refusal or mere written acknowledgment of the request, however brief, will prevent the operator from using this procedure.
“Occupier” loophole to be closed
Operators occupying sites under “old” Code agreements often cannot renew their agreements because the new Code procedure for renewals does not apply to them. They also cannot seek a permanent new Code agreement because rights must be agreed with or imposed on “the occupier”. As a matter of contract, where an operator is the occupier, they cannot form a contract with themselves.
The Bill will close this loophole by providing that, in these narrow circumstances, operators can obtain Code rights from the person who would otherwise occupy the land (in most cases, the landowner).
Rights to Upgrade and Share Apparatus
Automatic right to upgrade and share
Paragraph 17 of the Code currently contains an automatic right for operators under new (post-December 2017) Code agreements to upgrade or share their apparatus, provided (a) it has no more than a limited impact on its appearance and (b) it imposes no additional burden on the landowner.
The Bill will not alter this automatic right, but will extend it to apparatus installed at any time provided that:
- the apparatus is under land (primarily fixed line cables);
- upgrading/sharing activity does not require access to private land (or an agreement for this access is already in place); and
- the activity will have no adverse impact or burden on landowners above the apparatus.
For apparatus installed before 29 December 2003, the right will be available regardless of whether there is a current Code agreement in place.
Additional rights to upgrade and share
The government’s response to consultation clarified that more extensive rights to upgrade and share can be agreed between parties or, crucially, imposed by a court, a point which had previously been unclear.
The right to share which can be agreed or imposed under the Code has also been clarified somewhat:
- the Code right to share is a “bare” right, which benefits only the operator installing or maintaining the apparatus in question;
- the right to share apparatus with a third party does not imply any other rights (eg. a right for that third party to access the land) – this is a matter for those parties to negotiate; and
- the right to share is specifically a right to share apparatus – operators cannot share the Code rights themselves.
Renewing Expired Code Agreements
Agreements under LTA 1954
Agreements which are regulated by other statutory frameworks are currently excluded from the renewal procedure under the Code.
In England and Wales, these are mainly business tenancies under the Landlord and Tenant Act 1954 (“LTA 1954”).
The draft Bill amends the LTA 1954 to align it more closely with the Code. The Code’s statutory valuation scheme and compensation provisions will apply to LTA tenancies whose “primary purpose” is to confer Code rights, and disputes over the renewal of these tenancies will now be dealt with by the Land Tribunal rather than the County Court.
Procedure for renewal disputes
The government is also proposing a number of changes to the procedure for renewal disputes:
- All disputes will now be able to be dealt with in either the First-tier Tribunal or Upper Tribunal.
- The Secretary of State will have powers in future to amend the time limit for various types of Code cases (currently 6 months for all cases).
- Currently, site providers can apply for an interim order specifying the rent payable while a renewal dispute is being dealt with by the court. Operators will now be able to apply for this interim order as well, and the order will be able to impose non-financial terms as well.
The big omission – statutory valuation
The government themselves note that “a significant number of submissions” to consultation referred to the new statutory valuation scheme introduced with the 2017 changes to the Code.
Under the new scheme, rents payable by operators under court-imposed Code agreements have been severely reduced due to changes in the way the “market value” of land is calculated. Operators are in turn offering far lower rents in negotiated agreements, using the statutory valuation scheme as leverage.
The government’s position is that this scheme “remains appropriate” for the policy reason of improving the UK’s digital network, and they “do not intend to revisit” this issue.
It is fair to point out that the government’s stated aim was to fix the situation between landowners and operators. It remains to be seen how effective any changes can be when they have acknowledged this is a major (we would say the main) source of conflict between the two, but have refused to consider any changes.
The draft Bill is still passing through Parliament and may be subject to amendments. Other proposed changes, in particular the statutory complaints process, have yet to be drafted or introduced. We will keep an eye on these changes as they progress and provide further updates.